Creditworthy: A History of Consumer Surveillance and Financial Identity in America
In September of 2017 Equifax, one of the three major consumer credit reporting agencies in the United States, announced its system security had been breached and confidential consumer information may have fallen into the hands of hackers. Although reports of system intrusions are released almost daily, this breach was of particular significance: sensitive data, including personal, identifying and financial data, was compromised for an estimated 143 million consumers in the United States. Just this week, Equifax further disclosed another 15 million client records were breached in the United Kingdom. Any consumer who has received credit of any kind is familiar with the big three credit reporting agencies—Equifax, TransUnion, and Experian—as these agencies house the financial identities American consumers. With such vast data stores, credit reporting agencies are prime and potentially profitable targets for hackers. All the information a hacker needs to steal a financial identify of a victim resides in the agencies’ files. Clearly, credit reporting agencies play a critical role in the financial marketplace. How these agencies became the powerful guardians and suppliers of consumer financial information is the topic of Josh Lauer’s book, Creditworthy: A History of Consumer Surveillance and Financial Identity in America. This is the first book authored by Lauer, who is an associate professor of media studies at the University of New Hampshire with specialties in media history and theory, communication technology, consumer and financial culture, and surveillance. Lauer relates in great detail how we moved from a society of relationships and human interaction to one of faceless data designed to symbolize character and reputation. Lauer’s history takes us from a time when Americans desired access to goods and services more than they valued confidentiality, to the financial privacy concerns of these surveillance systems today.
Lauer traces the roots of credit reporting agencies back to 1841, when Lewis Tappan launched the Mercantile Agency, an “organization devoted to compiling detailed information about business owners in every corner of the nation” and the predecessor of today’s Dun and Bradstreet. He chronicles the importance of the “three Cs”—character, capacity, and capital—to the earliest credit agencies, providing entertaining excerpts from typical reports, describing subjects as having “a poor reputation as a man, but suppose to have money” and reports that included rumors concerning marital infidelity and gambling habits. Lauer pays considerable attention to the effect credit agencies had on society and how the presence of an agency or rumor of a credit agent visiting an area drove consumers to pay their debts lest their report be deemed derogatory. Lauer meticulously traces the history of the agencies from the beginning in 1841 through the agencies’ first attempts at coding information, the development of rating books and ledger systems and the evolution of the “credit man” as a profession. As the introduction of credit files and the telephone made access to information convenient and widespread, he tracks the origins of data mining for marketing purposes using agency records to target sales promotions. He also explores the roots of what we today term redlining, detailing how an experienced credit man was expected to “possess a complete and accurate mental map of his community to recall blacklisted neighborhoods and sections” along with the racial discrimination that justified low credit ratings based on skin color and nationality. The industry exploded after World War II as the economy boomed. The agencies had vast records that provided not only financial, but other personal information on consumers, and they capitalized on this fact by selling consumer information to third parties. Lauer’s details on the information collected and reported by the agencies is mind-boggling, and he provides an excellent history of the race into the computer age, the impact of credit cards, the roots of today’s mega-agencies, and the advent of credit scores, such as the Fair Isaacs still in use today.
Lauer hits his stride in the final chapters, which detail the fallout from the public awakening to consumer credit surveillance. The Congressional hearings on the bureaus and their data collection of the mid-1960s, the introduction of the Fair Credit Reporting Act of 1970, and the implications of the Equal Credit Opportunity Act of 1968 are skillfully presented in a way that paves the way to a discussion of credit surveillance in today’s digital world. By taking us on a journey through the history of credit surveillance, Lauer drives home the repercussions that are concerning today. With vast amounts of personal data and lax privacy policies, companies are able to classify consumers using algorithms that Lauer says, “threaten to produce—and reproduce—new data-driven classes of socially and economically powerful ‘haves’ and disempowered ‘have-nots.’”
Through his thorough analysis of the history of this industry, the seemingly harmless gathering of detailed consumer financial information throughout the years has led us to a point where our privacy is compromised and our financial identity has been reduced to algorithms and ratings. This book is appropriate for anyone interested in financial privacy, consumer profiling, the history of credit reporting and issues around financial identity.